The weird, rotten business of processor shortages

By Lara Greenhall General Motors has lost a lot of money so far this year, and it’s not just because it’s putting out well-reviewed cars at a discount. It’s also because it’s had to…

The weird, rotten business of processor shortages

By Lara Greenhall

General Motors has lost a lot of money so far this year, and it’s not just because it’s putting out well-reviewed cars at a discount. It’s also because it’s had to curb production because of a supply chain shortage for so-called processors, which are used in computers and cell phones.

The company reported that third-quarter net income plummeted 71% to $358m, or 46 cents a share, down from $1.1bn, or $1.73 a share, in the same period a year ago. Revenue fell to $33.2bn from $35.1bn.

Those kinds of numbers leave you wondering what’s going on with the company’s car lines. In fact, a US court has ruled that GM Motors Must Make Do With 17-Year-Old-Worker Workers In New Plant

GM is a regular on my America’s Last Car Dealer blog, though for all the positive stuff I write about car deals, I’m also going to chime in about the chip shortage. Yes, General Motors is still struggling to fully recover from the financial downturn of the early 2000s. It is, by itself, too big and too interconnected to fail. A third of its customers are in bankruptcy; 75% of its business comes from outside the US.

That means that in order to rebuild its profit, the company is going to have to do something it’s not normally good at: broaden out its product line. The third quarter was a big test of this. Pickup trucks and SUVs still represent most of the company’s profits, but the new Cadillac XT5 and the Chevy Traverse – the first big SUV from GM since the Tahoe in 2005 – have been a hit.

The Volt, an electric car, also showed promise, though that’s a bit confusing since a significant part of GM’s cost-cutting in recent years has been getting rid of costlier cars in order to finance the new line of electrics and hybrid trucks and SUVs.

Revenues fell as demand decreased in China and Brazil, but the automaker said that higher-than-expected sales of SUVs – which cost more to produce than other models – helped to offset some of the issues that dragged down profits.

Still, with full-year losses of $8bn over the past two years, General Motors is still a long way from making a profit. And, yes, a chip shortage is part of that. But enough already: As for the curious old 14-year-old-worker workers at the US plant, a judge on Wednesday ordered GM to continue the hiring of young workers there while the US Labor Department investigates allegations that they had been working with lead and were told to hide it from health and safety inspectors.

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